The proposed amendments would make US GAAP more consistent with IFRSs, especially with IAS 1 Presentation of Financial Statements that includes guidance on the classification of liabilities. The exposure draft notes that FASB leveraged IAS 1 guidance when developing its proposals for the classification of debt. Furthermore, the FASB’s decision on applying the debt classification principle to post-balance-sheet refinancings of debt is consistent with the guidance in IAS 1. However, differences would still remain between US GAAP and IFRSs for classifying debt arrangements with covenant violations.

The IASB currently has a project on its agenda to amend IAS 1 that is specifically related to the classification of liabilities. Final amendments to IAS 1 are currently expected in the fourth quarter of 2019.

The exposure draft can be accessed through the press release on the FASB website. Comments are requested by 28 October 2019.

The new video answers ten questions which are frequently asked by market participants to ESMA and National Competent Authorities on the ESEF Regulation.

Please click to access the seven minute video on YouTube.

Within its goodwill and impairment project, the Board is investigating how companies can provide users of financial statements with better information about mergers and acquisitions (business combinations) at a reasonable cost. This investigation includes the challenging question of how companies should account for goodwill after the business combination.

The six-page article discusses the Board's preliminary views that:

• "we should enhance disclosure objectives and requirements to improve the information provided to users about an acquired business and its subsequent performance, even if that information must be on a combined basis where the acquired business has been integrated into an existing business;
• it is not feasible to make the impairment test significantly more effective at recognising impairment losses of goodwill;
• reintroducing amortisation of goodwill would not provide significantly better information to users;
• we should reduce the cost and complexity of the impairment test by providing relief from the mandatory annual quantitative impairment test for goodwill;
• we should also reduce the cost and complexity of the impairment test by simplifying some of the requirements for estimating value in use;
• we should not allow more intangible assets to be included in goodwill; and
• we should enhance transparency by requiring companies to present total equity before goodwill in their balance sheets."

The article notes that the Board plans to issue a discussion paper on these issues at the end of 2019.

Mr Schérer will replace Isabelle Grauer-Gaynor, who is stepping down from EFRAG TEG as of 13 September.

For more information, see the press release on the EFRAG's website.

A summary of the agenda is set out below:

Agenda papers for the meeting are available on the IASB website.

New Issues

The Committee will discuss three new issues.

IFRS 15 Revenue from Contracts with Customers—Training costs to fulfil a contract (Agenda Paper 2). Should training costs that are incurred by a supplier, that are necessary to be able to deliver a service to a customer and that are recoverable from the customer, be recognised as a contract asset?

IFRS 16 Leases—Definition of a lease—Shipping contract (Agenda Paper 3). Does a particular type of shipping contract contain a lease? 

IAS 21 The Effects of Changes in Foreign Exchange Rates and IAS 29 Financial Reporting in Hyperinflationary Economies—Translation of a hyperinflationary foreign operation (Agenda Paper 4) How does an entity, with a non-hyperinflationary presentation currency, present the information required by IAS 21 and IAS 29 for its interest in a foreign operation which is hyperinflationary?

The staff are recommending that the Committee not develop any Interpretations or amendments but instead publish tentative agenda decisions. 

Agenda decisions to finalise

The staff are recommending that the Committee finalise six tentative agenda decisions.

IFRS 15 Revenue from Contracts with Customers—Compensation for delays or cancellations (Agenda Paper 5). Should an obligation to compensate customers for delayed or cancelled flights (as set out in legislation) be recognised as part of the transaction price or as an obligation in accordance with IAS 37?

IAS 41 Agriculture—Subsequent expenditure (Agenda Paper 6). Should an entity capitalise or expense the costs related to the biological transformation of biological assets?

IAS 7 Statement of Cash Flows—Changes in liabilities arising from financing activities (Agenda Paper 7). Some investors have expressed concerns about the quality and consistency of disclosures about changes in liabilities arising from financing activities required by IAS 7.

IFRS 16 Leases—Incremental borrowing rate (Agenda Paper 8). Does the incremental borrowing rate need to reflect the interest rate in a loan with both a similar maturity to the lease and a similar payment profile to the lease payments?

IFRS 9 Financial Instruments—Fair value hedge of foreign currency risk on non-financial assets (Agenda Paper 9). Can foreign currency risk be a separately identifiable and reliably measurable risk component of a non-financial asset held for consumption (for example, property, plant and equipment and inventory denominated in a foreign currency) that an entity can designate as the hedged item in a fair value hedge accounting relationship?

IAS 1 Presentation of Financial Statements—Presentation of liabilities or assets related to an uncertain tax position (Agenda Paper 10). Should an entity present a liability related to uncertain tax treatments as a current (or deferred) tax liability or as a provision?

Work in progress (Agenda Paper 11)

There are no new matters that have not yet been presented to the Committee. The staff will present the analysis of comments of the tentative agenda decision 'Lease Term and Useful Life of Leasehold Improvements (IFRS 16 Leases and IAS 16 Property, Plant and Equipment)' at a future meeting.

The full agenda for the meeting can be found here. We will update this page for any changes to the agenda and our Deloitte pre-meeting summaries for the meeting as they become available.

The first article Is Goodwill a Wasting Asset? can be accessed through the press release on the IVSC website.

Mr Hoogervorst began by reflecting on the IASB's history with the KASB. He moved on to discuss the future of financial reporting and remaining relevant in a changing world. He noted, 'To remain relevant, we must adapt.' He reiterated his view that the IASB is unlikely to tackle sustainability reporting standards, but noted their importance. He also pointed to the work the KASB is doing to shrink the gap between book value and market value of companies — the KASB is researching the possibility of a separate 'Statement of Key Intangibles'. 

For more information, see the transcript of Mr Hoogervorst's speech on the IASB's website.

EFRAG is seeking to engage with subject matter experts and practitioners to discuss the following:

• Issuance via initial coin offerings and similar offerings;
• Holding/investing activities and payment services;
• Custodial and storage services; and
• Mining services.

The outreach will be conducted through phone interviews and the questions will be shared before the interview.

Please click for more information on the EFRAG website.

Specifically, this issue features insight into the proposed amendments related to commission paid on short-term insurance contracts with expected renewals and profit recognition on long-term insurance contracts with investment returns.

For more in­for­ma­tion, see the press release and Investor Per­spec­tives article on the IASB’s website.